What is the fiduciary rule?
The US Department of Labor fiduciary rule is a piece of legislation that will automatically promote all financial advisers who work on retirement accounts or savings to fiduciary level. This means they will be legally bound to giving their clients advice in their best interests.
The rule is scheduled to come into effect on 10th April, 2017.
Where have you heard about the fiduciary rule?
The US Department of Labor fiduciary rule has been all over the news since its proposal in April 2015. Recently, there has been debate over how Donald Trump's presidency will affect this rule and what influence the rule will have on retirement savings if it is passed.
What you need to know about the fiduciary rule.
As a fiduciary, financial advisers are legally required to adhere to much stricter rules on the standard of care for their clients.
The US Department of Labor fiduciary rule is basically a reform of the Employee Retirement Income Security Act of 1974 (ERISA). It has been brought in to ensure that financial advisers always give their clients best interest advice. Previously, financial advisers were not legally required to share any potential conflicts of interest, which reportedly cost investors $17 billion a year in lost income.
The rule is specifically targeted at updating the regulations around retirement savings and accounts, so normal brokerage accounts will not be affected.